As you know, prescription drug costs have been surging at double-digit rates for the last six years. The average annual increase 1999 through 2003 was a massive 16%, seven times the rate of general inflation.

These increases fall hardest on senior citizens and the uninsured. Their health needs are often great, and their low incomes often make these products unaffordable. They have no ability to use their combined purchasing power to negotiate reasonable prices. Taxpayers pay tens of billions of dollars for the purchase of drugs by Medicaidan expense that could be reduced significantly if states are permitted to negotiate for the best prices from drug manufacturers.

As you know, the Supreme Court has just ruled that Maine's innovative program to reduce prescription drug costs for the uninsured and senior citizens is not a violation of the Medicaid law. As a result of this decision, Maine can use the combined buying power of Medicaid and individuals purchasing drugs on their own to negotiate lower prices with drug manufacturers. Twenty-nine other states supported the position taken by Maine, and there is broad interest in many states in initiating similar programs.

The Supreme Court's ruling, however, left open the possibility that if the Department of Health and Human Services makes a finding that the Maine program violates the Medicaid statute, the Department's action would be upheld by the Court. We urge you not to intervene to block Maine's program or similar statutes in other states that achieve savings for taxpayers, the elderly, and the uninsured. Such programs must be carefully implemented to assure that the poor are not denied access to needed drugs, but there is no justification for the federal government to deny states the ability to negotiate lower drug prices on behalf of their neediest citizens.